Wednesday, February 13, 2013

Three Letters that Cost Government Millions

Federal, state and local governments waste millions or perhaps billions of dollars by making requests for proposals too vague, and hedging their bets with language which forces contractors to pad their estimates in order to reduce the risk of misunderstanding requirements and scope creep.

Just three letters -- "etc" -- account for significant waste.  We often see "etc." added to the end of a long list of requirements as if to protect the writer of the solicitation from an inadvertent omission. Other phrases are sometimes used in place of "etc." such as "including but not limited to."

Bidders have two options in handling ambiguous requests.   One is to bid low, hoping either that the unknown requirements will not be large and sink their project or planning to use change orders to cover the revelation of the unknown with additional funding.  The other option is to bid high, conservatively adding time and dollars to a bid to cover even what has not been revealed.

Neither approach is in the interest of the government customer.   A simple search for "etc" in a solicitation before it is published could save millions in tax dollars.

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